The IRS may finally have an answer to its long struggle to update and upgrade its major systems that collect and track the nation’s revenue.

The tax agency isn’t getting more money or more people, or even that technology silver bullet. Instead, Terry Milholland, the IRS chief technology officer, went after the agency’s business processes.

Milholland said the IRS earned level 3 certifications for the Capability Maturity Model Integration (CMMI) and the IT Infrastructure Library (ITIL).

This means the IRS has met these industry standards to bring it up to “world- class” standing when it comes to the processes for developing technology and managing the change new IT brings.

“The big benefit for users is our estimates for work are far more reliable. That is, what resources do we need in terms of dollars? What skills do we need to do the job? And our schedule estimates are far more reliable and consistent,” Milholland said in an interview with Federal News Radio. “In addition, the quality goes up dramatically… [W]hen we began, we were not measuring defects and the impact on the users from their lost productivity because of a particular defect. By doing this and establishing metrics, you begin to change IT into the business partner that understands the impact on the business when we make mistakes.”

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Lacking discipline led to IT struggles

Milholland became the IRS CTO about four years ago and found a much different approach to systems development.

For more than a decade, the IRS has been in a constant struggle with its Business Systems Modernization (BSM) effort.

It has seen numerous inspectors general and Government Accountability Office reports, and heard from private sector experts, all faulting and criticizing the planning and performance of the BSM initiative.

In April, IRS Commissioner Douglas Shulman said BSM has been underfunded, with the agency spending less than 3 percent of its budget on long-term enhancements. GAO said it’s not a lack of funding, but a dependence on out-dated systems.

All together, the IRS’ struggles are well documented and well known.

Shulman is stepping down next week as the commissioner after nearly five years at the helm. Add to these challenges the IRS needs to annually update its systems based on changes enacted by Congress to the tax code.

Milholland could attribute some of those problems to a lack of systems development discipline.

“We tended to be stuck in the 1990s with what I’ll call a guild shop mentality, which is where you have some very superb people, masters of their craft, and with them on various projects, are people with varying degrees of skill, journeymen and women and apprentices, people who are basically new and a lot less experienced,” he said. “Each one of those projects would deliver based on the tenets of the master and each would do it differently than someone else. And thus projects would all be siloed and people would use different programming practices, different programming languages, would deliver systems with varying degrees of quality, and this was across the entire IRS. While we always were able to deliver during filing season, we were having difficulty in many areas that would seem to repeat themselves, problems would occur over and over again.”

No more choices, just standards

To break the guild culture, Milholland decided to take the IRS on the path toward CMMI and ITIL maturity.

Each level takes 18-to-24 months and is as much about change management as it is about changing internal processes.

“Each master has a favorite programming language, say C# or C++, or someone decided this application would run on Solaris because they liked it. The change now is that decision is taken away,” he said. “You have architecture process in which we have selected certain technology standards that you will follow and you no longer have that choice. For example, I declared Java would be our standard development language and along with that comes a number of tools and that the environments we would develop on would be Linux.”

Milholland said developers still can make their case if they can show why the standards will not work.

“It was no longer a case of constantly picking and choosing among competing choices. You have a choice and this is it,” he said. “That itself was a dramatic thing the way the enterprise would operate.”

The IRS has high expectations for what moving to CMMI and ITIL level 3 means more broadly for the agency.

Milholland said in the private sector, companies who reach level 3 can expect to see as much as a 25 percent increase in productivity, capacity and quality.

“People began to see who were working on it that it wasn’t just me doing the encouragement for this effort, but the folk in the organization who were committing themselves to these disciplines of process management were starting to see that we are eliminating all this rework we were doing before,” he said. “They could see improvements themselves as they were constantly fighting fires. The firefighting has really diminished. We still have those, but nothing like what it was before. Now you are able to spend your time and effort on doing it right the first time, rather than catching up to it later.”

Certifications earned ahead of schedule

In fact, Milholland said the technology staff accepted the process changes more quickly than he or anyone else expected.

“The test for me came when I could see that this was now owned by the organization rather than me,” he said. “We hit the marks on this three months before I thought we would because it became owned lower down in the organization rather than at the top. They could see the benefits of achieving a level of improvement both in their capacity to do more and in the quality of what they were producing.”

Changing the culture of any organization usually is the biggest challenge when instituting new policies. Milholland said his office had to educate the developers on what CMMI and ITIL level 3 meant, and train them on the new standards.

“Part of that becomes part of program plan for CMMI and ITIL, where you manage it like any other IT program,” he said. “You’re not developing code, but processes, and you need to recognize it needs top down sponsorship and encouragement. We spent lots of time and effort dealing with road blocks, of which some were real and some were imagined.”

He said the biggest problem was getting people to willingly do something in another way that was not theirs in the first place.

“We addressed that by having the experts define the new way, and we created the new way together,” Milholland said. “That way it feels less imposed upon you than if someone came out of the blue said, ‘I heard you, but now you will do it my way.'”

He added using metrics is a way to understand what the defects are at the time and fix them and not after the fact to chastise someone over problems.

The IRS paid for the entire CMMI and ITIL initiatives through the savings they achieved and didn’t take it out of projects or programs.

“It has to be done over multiple years not just a one-time project need,” Milholland said. “As we improved the cost of our dealing with the rework or that the inefficiencies we found, we would use the cost savings from that and invest in the training or tools selection that we needed. I thought that was a better way to sell it than making individual projects pay themselves. We chose to do this from the top down and invest in ourselves.”

Tom Temin is the host of The Federal Drive, which airs from 6-9 a.m. on 1500 AM in the Washington, DC region and online everywhere. Tom has 30 years experience in journalism, mostly in technology markets. Before coming to Federal News Radio, he was a long-serving editor-in-chief of Government Computer News and Washington Technology magazines.